TAILIEUCHUNG - Barfield Raiborn Kinney Cost Accounting_14

Chi phí ban đầu của phần cứng và phần mềm cứu hộ giá trị dự kiến trong 4 năm chi phí khấu hao hàng năm điều hành hàng năm tiết kiệm lao động hàng năm dự kiến cuộc sống của các hệ thống máy tính | Chapter 14 Capital Budgeting 649 Initial cost of the hardware and software 32 000 Expected salvage value in 4 years 0 Annual depreciation 8 000 Annual operating costs 4 500 Annual labor savings 25 000 Expected life of the computer system 4 years Ted has determined that he will invest in the computer system if its pretax payback period is less than years and its pretax IRR exceeds 12 percent. a. Compute the payback period for this investment. Does the payback meet Ted s criterion Explain. b. Compute the IRR for this project to the nearest percent. Based on the computed IRR is this project acceptable to Ted 62. NPV PI Houston Storage provides warehousing services for industrial firms. Usual items stored include records inventory and waste items. The company is evaluating more efficient methods of moving inventory items into and out of storage areas. One vendor has proposed to sell Houston Storage a conveyor system that would offer high-speed routing of inventory items. The required equipment would have an initial cost of 2 500 000 including installation. The vendor has indicated that the machinery would have an expected life of seven years with an estimated salvage value of 200 000. Below are estimates of the annual labor savings as well as the additional costs associated with the operation of the new equipment Annual labor cost savings 14 workers 465 000 Annual maintenance costs 20 000 Annual property taxes 14 000 Annual insurance costs 22 000 a. Assuming the company s cost of capital is 9 percent compute the NPV of the investment in the conveyor equipment ignore tax . b. Based on the NPV should the company invest in the new machinery c. Compute the profitability index for this potential investment ignore tax . d. What other factors should the company consider in evaluating this investment 63. NPV PI payback IRR Custom Driveways provides custom paving of sidewalks and driveways for residential and commercial customers. One of the most labor-intensive aspects of

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